Shares of IIFL Holdings and Motilal Oswal Financial Services (MOSL) fell up to 9 percent on Monday after the Securities and Exchange Board of India (SEBI) declared the commodity broking arms of both the brokerages not 'fit and proper' for their alleged role in the Rs 5,600 crore NSEL scam in 2013.

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"In view of the seriousness of the matter, facts and circumstances of the case, the conduct of the noticee in its functioning as a commodity broker is questionable and has certainly eroded its general reputation, record of fairness, honesty and integrity and has therefore affected its status as a 'fit and proper person' to be an intermediary in the securities market," the designated authorities said in the report submitted to SEBI.

IIFL Holdings shares slumped as much as 8.9 percent to Rs 332.50 per share intraday on the BSE. Motilal Oswal shares fell 5.11 percent intraday to Rs 581 per share.

At 9.52 AM, IIFL Holdings was down 3.02 percent at Rs 354.30 per share and Motilal Oswal traded 3.98 percent lower at Rs 587.90 per share, while the benchmark Sensex gained 0.16 percent to 35,930.63.

Both the stocks have fallen over 50 percent in the last one year.

SEBI has also ordered both Motilal Oswal and IIFL to transfer securities of all their clients and allow withdrawal within 45 days of the order.

Failing this, "the noticee shall transfer its balance clients with their corresponding securities and funds to another person, holding a valid certificate of registration to carry on such activity, within a further period of 30 days", the order said.

Both brokers, in separate statements, said that they could appeal against the orders and that the ban will not impact the groups’ businesses.

First Published:Feb 25, 2019 9:47 AM IST